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Predatory Credit Card Practices seem to be a hot topic at the moment. A CBC story suggests that Canadians want a credit card ‘bill of rights’.

Canadians feel powerless when it comes to their credit cards — whether the problem is high interest rates, confusing fine print or hidden fees — and they want a consumers’ “bill of rights” to protect them, according to an EKOS poll conducted for CBC’s Marketplace. At this time of widespread financial uncertainty, respondents to a four-day survey conducted Feb. 12-16 were asked, “Would you support a credit card bill of rights that would provide legal protections for consumers in their dealings with companies that issue credit cards?” Eighty-two per cent of respondents answered yes.

The poll was done as part of a larger investigation by the CBC’s investigative consumer program Marketplace (Friday, 8:30 p.m.) into hidden charges lurking on some credit card bills.

There are many causes for concern, with a major one being the credit card loan-insurance schemes. What is often not mentioned in the promotional literature is how expensive credit card balance insurance can be and how little it often pays off. Fully 51 per cent of those polled in the CBC survey who have the insurance said they did not know it only covers the minimum monthly payments if you lose your job or get sick.

The Financial Consumer Agency of Canada is the government’s watchdog over financial institutions. It informs Canadians of their rights and responsibilities when dealing with financial institutions and ensures compliance with the federal consumer protection laws that apply to banks and federally incorporated trust, loan and insurance companies.

In the United Kingdom, this type of credit card balance or loan insurance has caused a huge outcry and investigation. It is often called Payment protection insurance (PPI). A BBC article indicates the UK government has cracked down and Loan insurance is to be restricted

Payment protection insurance (PPI) sales will be banned while customers take out a loan. Such insurance cost borrowers more than £4bn in 2007 and is supposed to repay borrowers’ loans if they fall ill or lose their jobs. Leading providers had faced little competition for PPI and, as a result, had charged persistently high prices. The Competition Commission’s final set of proposals on PPI is the culmination of a four-year campaign by consumer organisations, and then regulators, against the mis-selling of the insurance by banks and other lenders.

This seems to be a topic that is coming up in a number of countries at the same time. President Obama is also promising to Address Predatory Credit Card Practices.

Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices. Such a Credit Card Bill of Rights will:

Ban Unilateral Changes

Apply Interest Rate Increases Only to Future Debt

Prohibit Interest on Fees

Prohibit “Universal Defaults”

Require Prompt and Fair Crediting of Cardholder Payments

It seems clear that such a credit card Bill of Rights will be very well received both in the USA and in Canada. Certainly it would address many of the credit card concerns expressed in that CBC Canadian survey.

PPI: Banks to be banned from selling alongside loans Competition Commission rules (telegraph.co.uk)

Technorati Tags: balance insurance, Canada, Credit card, Payment protection insurance, UK, USA

As a confirmation of the depth of the recession around the world the numbers of filings for bankruptcy seem to be soaring wherever you look. Here are just some of those headlines.

Canadian bankruptcies soar 47 percent in December

The Office of the Superintendent of Bankruptcy said Monday 8,299 individuals and businesses went bankrupt in December, up from 5,659 for December, 2007, a jump of 46.7 percent. The latest numbers are a staggering sign of how quickly the Canadian economy has slowed.

Japan company bankruptcies soar

Corporate bankruptcies rose 16 percent to a six-year high for the month of January, and the number of bankruptcies among listed companies is already at a record high for any financial year since World War Two, research firm Tokyo Shoko Research said.

Personal bankruptcies ballooned in Mass. US, last year

“There were 11,638 filings under Chapter 7 of the US bankruptcy code last year, up from 8,245 in 2007 and more than double the number in 2006 when there were 4,698 filings,” the Warren Group, a Boston firm that tracks such data, said in a press release. “Nearly all of the filings, or 98 percent, were by individuals.”

Record numbers are declared bankrupt in the UK as recession bites

The number of people being made bankrupt hit an all-time high during the last three months of 2008, as the country’s worst recession in three decades left thousands of individuals unable to pay their debts.

The increase in the number of people declaring themselves insolvent was particularly high in Scotland and Northern Ireland – jumping 75 and 39 per cent respectively in the final quarter of 2008, compared to the same period a year ago. In England and Wales, there was an 18.5 per cent jump in personal insolvencies. In total, 35,694 people declared themselves insolvent across the UK during the quarter.

Numbers are up for both personal and company filings for bankruptcy. However given the recent fate of Iceland, questions are even raised about the bankruptcy of countries. The Huffington Post suggests that the UK Will Be Hardest Hit By Global Recession: IMF.

World economists predicted today that the UK would be hit harder than any other developed nation by the worst recession in more than 60 years. The International Monetary Fund’s (IMF) grim outlook showed the economy shrinking by 2.8 per cent this year, more than twice as bad as it previously thought and well above the 2 per cent average for advanced countries.

The Institute for Fiscal Studies (IFS) also predicted that swollen levels of public sector debt would not return to pre-crisis levels for more than 20 years.

It may be a overly pessimistic view but Web TV Hub suggests that Britain itself may be on the road to bankruptcy. You can read the details of its arguments in the following three part series on Bankrupt Britain:

Part 1: Europe Blames America While U.K Warned of Bankruptcy

Part 2: U.K Government Destroying Britain to Help Banks?

Part 3: Is the BBC Hiding Britain’s Bankruptcy?

With this concern for the possibility of the U.K government becoming bankrupt, the series suggests that many U.K news organizations are failing to inform the public of the issues in this argument.

The strength of an economy depends in part on the confidence that the government can generate in the nation. Clearly in the US, President Obama has been able to create a confidence-building stimulus deal.

Obama’s success at steering a stimulus package from promise to reality is a confidence booster, in and of itself, almost without respect to the actual content of the package. A couple more accomplishments like this, and he might begin to create the illusion that he is an effective leader who can get things done. For a nation shell-shocked after eight years of fiascos, that could be a pretty key step toward facilitating an eventual recovery.

One hopes that other national leaders will be equally effective in building confidence through the economic actions they are taking to counter the recession.

Britain’s recession will be deepest IMF warns (telegraph.co.uk)

Technorati Tags: Bankruptcy, confidence, International Monetary Fund, stimulus, UK, USA

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Predatory Credit Card Practices

Bankruptcies Soar And There Will Be More

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